Questions linger in Arizona education funding suit

By MELISSA DANIELS and BOB CHRISTIEApril 17, 2018

FILE- In this May 26, 2016, file photo, Arizona Gov. Doug Ducey, second from right, signs a proclamation certifying the results of Proposition 123 on school funding at the state Capitol in Phoenix. A Phoenix man who won a federal court ruling finding Arizona distributed more than $344 million to schools since 2016 without Congressional approval won't ask for the money to be repaid because Congress finally approved the payouts last month. (AP Photo/Ryan Van Velzer, File)

PHOENIX (AP) — A Phoenix man who won a federal court ruling finding Arizona distributed more than $344 million to schools since 2016 without Congressional approval might seek hundreds of millions of additional dollars for education funding.

Michael Pierce’s attorney Andrew Jacob on Monday told U.S. District Judge Neil Wake that he believes about $300 million dollars would’ve gone to schools from the state land trust prior to voter-approved changes to a funding formula that the judge since found were made without requisite Congressional approval.

“If the state had followed the law and been held to it, that money would’ve come out of fiscal year 2013 to 2014, 2015, and we believe it should come out now,” Jacob said.

But since federal courts are barred from telling states what to do with their money in most cases, a state court action might need to filed seeking such relief. Jacob also wants Wake to issue a formal judgment that says any changes to distributions require Congressional approval.

Gov. Doug Ducey’s attorneys argued that the case should be ended right away. Attorney Timothy Berg argued that not only has Congress given their approval to Proposition 123, the most recent voter-approved change to the funding formula, but that authorization also extends to Proposition 118, a prior voter-approved changed from 2012.

“The only issue in this lawsuit has been resolved,” he said.

Wake said he’s open to allowing Piece to file new papers over whether the Congressional authorization covers Proposition 118. He advised Jacob to “confer with the other side as much as you want, and then fish or cut bait.”

Jacob said he intends to file papers regarding their next moves by the end of next week.

The 23-month-old lawsuit is churning ahead at a time when education funding plans are at the heart of state budget negotiations. Ducey’s spokesman Daniel Scarpinato said “Proposition 123, having been validated by Congress, is the law of the land,” and will allow $3.5 billion to flow into schools over a decade.

Congress created the permanent land trust mainly to fund K-12 schools, although universities and other services get some of the money, deeding more than 9 million acres (3.2 million hectares) to the state to create the fund. Any revenue from the land or sales goes into an account.

Between 1999 and 2012, the schools got the difference between a five-year fund growth average and five year inflation rates under a change approved by Congress.

In 2012, then-state Treasurer Doug Ducey championed a referendum to level those payments out to a 2 ½ percent a year. Voters approved the change, but Ducey argued that approval wasn’t needed and Congress never did.

In 2016, Ducey, now governor, pushed another change — one to boost annual payments to 6.9 percent in an effort to settle a school funding lawsuit without raising taxes.

Enter Pierce, a retired construction worker, believed the change violated the federal Enabling Act, the 1912 law that created Arizona and set up the land trust. Without an attorney, he sued, and Wake appointed Jacob to represent him.

Wake ruled on March 26 that Proposition 123 violated federal law and that Arizona may have to repay at least $344 million to the state land trust — but Pierce and Jacob don’t intend to seek that kind of relief. He also ruled that Proposition 118 was illegal.

Jacob is now conceding that the March congressional approval takes Proposition 123 off the table, but that it doesn’t cover Proposition 118. He says without the unapproved level-payment schedule included in that measure, higher investment returns mean schools would have received about $300 million more between 2012 and when Proposition 123 took effect.

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This story has been corrected to show the 2012 measure was Proposition 118, not Proposition 108.